Summer vacation on head, but Jet Airways, SpiceJet, IndiGo stocks hit fuel air pocket, tank up to 12%

Summer vacations are on our heads and airlines are eyeing holiday travellers to give them a big boost in the hot summer months. Families would be out for a good time as schools are set to close and airlines have already started presenting mouth-watering offers in India and abroad. However, the airlines, whether affordable or premium, have been hit by the fuel bomb. There is simply no relief in sight from rising prices of this commodity and it has changed the nature of prospects in coming months from calm to volatile. And not just airlines, even investors in the stocks of these airlines would have been eyeing gains to be milked from this yearly opportunity. But right now, they have been left bleeding badly. Jet Airways, SpiceJet and InterGlobe Aviation share prices today tanked by up to 12 per cent as investors fear that rising fuel prices will inflate the cost of aviation turbine fuel (ATF), putting pressure on airlines' margins even further. 

The stock of SpiceJet dropped 11.58 per cent to hit an intraday low of Rs 92 and Jet Airways slipped 5.24 per cent to Rs 395.25 on BSE. 

Shares of InterGlobe Aviation too fell by 4.81 per cent to Rs 1087.20.

Higher crude oil prices inflate the input cost for aviation companies as jet fuel constitutes over 40 per cent of an airline's operating cost.

As of May 1, 2018, ATF prices in Delhi stood at Rs 65,340, which may go up if globally, Brent crude price maintains its rising trend. 

Brent crude crossed $80 per barrel last week. Today, Brent crude futures were up 35 cents at $78.86 a barrel, while US West Texas Intermediate (WTI) crude futures rose 29 cents to $71.57 a barrel.

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Meanwhile, petrol and diesel prices in the country have hit their all-time highs, and have been on a rising spree for last 8 days. Oil marketing companies such as IOC, BPCL and HPCL had refrained from hiking domestic prices since April 24 due to Karnataka vote day on May 12 even as global Brent crude oil had hit its highest in four years. Ever since the voting in Karnataka concluded, the OMCs have been hiking fuel prices on a daily basis. 

Petrol price hit a record high of Rs 76.57 per litre in Delhi, beating the previous all time high of Rs 76.06 of September 2013 after prices rose by 33 paise today. Diesel prices were also raised by 25 paise to Rs 67.82 per litre in Delhi.